To find out why Greece’s pension system is tying negotiators up in knots, look no further than Maria Kounani, 59, a mother of two, single parent and early retiree. The maker of sewing patterns applied for a reduced pension last year, when the business where she’d worked for 20 years struggled with unpaid orders. To qualify for a full pension she needed to work another 10 years. She opted for early retirement, the only real choice she says she had, and one Greece’s creditors say is undermining the pension system. “I did it because no one is hiring me,” Kounani said. “They’re not even hiring my daughter who’s 39.” As Greek pensions become a key sticking point in talks with creditors, cases like Kounani show why there are no simple ways out. For creditors, the pension system is still too generous. For the Greek government, it’s a system struggling to cope after five years of recession and dwindling contributions in a nation with the European Union’s highest unemployment. An aging population and an 8 billion-euro ($9 billion) hit to pension finances because of the largest sovereign debt restructuring in history in 2012 hasn’t helped. “If you have a new contribution system and a new system of calculating pensions and a person loses her job, she falls out of the system,” said Jens Bastian, an economist and a former member of the European Commission’s Greek task force. “That’s a macro issue that no number of pension system reforms can fix.” ‘Unrealistic’ Creditors The government of Alexis Tsipras came to power promising to roll back cuts to pensions. Creditors want Greece to slash even more. Italian Prime Minister Matteo Renzi said on June 4 that it was “unthinkable” that Italians should help pay for a Greek pension system that’s more generous than their own. Creditors are asking Tsipras to implement reforms agreed to and deliver savings of as much as 0.5 percent of gross domestic product this year and 1 percent next year in part by immediately clamping down on early retirees. They also want supplementary pension funds—lowered about 5 percent last year—to be financed by contributions, not the state budget. In parliament on June 5, Tsipras called the proposals from creditors “unrealistic” and said no lawmaker could agree to demands such as removing a stipend from the lowest-paid pensioners. Tsipras has agreed to merge funds to cut administrative costs and close loopholes that allow early retirement. He blamed five years of austerity for weakening the system, saying fund reserves fell by 25 billion euros through the 2012 debt swap and high unemployment. Butcher vs Surgeon In the last five years, pensions fell as much as 48 percent, Tsipras said, while 45 percent of recipients get pensions that are below the poverty threshold. Kounani gets a provisional payment of 420 euros a month and will get a final pension disclosed to her next year. She hopes it will be a little more than what she gets now, so that there’s a bit left over after paying her rent of 360 euros a month. “Of course this pension system is not sustainable,” Finance Minister Yanis Varoufakis said in Berlin on June 8. “Any butcher can take a cleaver and start chopping things down. We need surgery. We need to find ways of eliminating early retirements, of merging pension funds, of reducing their operating costs, of moving from an unsustainable to a sustainable system, rationally and gradually.” Making Improvements In 2012, Greece spent more relative to GDP on pensions than any other EU nation. The 17.5 percent of GDP it spent compared with the EU average of 13.2 percent, according to the most recent Eurostat figures. That’s in part because the Greek economy has shrunk by a quarter since 2008. An aging population isn’t helping—Eurostat predicts Greece will have one of the highest dependency ratios in the EU, with fewer than two working adults per dependent by 2060. The wave of reforms begun in 2010, in the months after Greece agreed the terms of its first bailout with the European Commission, International Monetary Fund and European Central Bank, scaled back payments, introduced means-testing, raised the statutory retirement age and calculated pensions over the entire working career. The result was Greece was able to move from having the weakest pension system in the world in 2011, according to Allianz Asset Management’s pension sustainability index, to cede that place to Thailand, Brazil and Japan in 2014. Want to Work Greece chased employers and employees to pay contributions. Bank of Greece Governor Yannis Stournaras said on June 2 that public pension expenditure is set to decline by about 1.9 percent of GDP by 2060, the fifth best performance in the EU, citing the European Commission’s 2015 Aging Report. Still, the recession, with unemployment at 25.6 percent in March and a wave of company closures, has hit contributions. “The program applied caused greater problems in terms of loss in contributions than the sum of money collected through the program itself,” said George Simeonides, a board member at the Hellenic Actuarial Authority, which monitors the pension system. “In some cases the cure was worse than the disease.” Greece’s debt restructuring cut the nominal value of the bonds held by pension funds by 8.3 billion euros, Simeonides estimates. The funds may take further real hits when they’re forced to sell their holdings to pay pensioners, he said. For her part, Kounani says she didn’t want to lean on the pension system. “I’m relatively young, I didn’t need to retire now,” she said. “My job wasn’t hard: it’s satisfying and creative. If I were able to get another job I wouldn’t have taken the pension.”